Stephen Nigro, president of HP Inc.'s 3D printer business, says we're on the cusp of the Fourth Industrial Revolution.

It's a message that falls on wary ears. The industry developing additive, or three dimensional, printers burned hot on the stock market several years ago. But demand for the developing technologies fell short of expectations. The highflying 3D printing stocks crashed as investors fled. After two years of earnings declines, names including Stratasys (SSYS) and 3D Systems (DDD) are once again piecing together rising profits.

In the meantime, the industry has experienced some massive alterations. First, the entry to the 3D print game of both HP Inc. (HPQ) and General Electric (GE) has raised the competitive bar and shifted expectations from consumer to industrial markets.

Computer giant HP joined the effort in May, introducing its first 3D printers, the HP Jet Fusion 3200 and Jet Fusion 4200 printers. These are machines priced upward from $130,000 and aimed at serious commercial use. Nigro contends the equipment will revolutionize the design, prototyping and manufacturing processes.

IBD'S TAKE: HP shares ended Friday's session toying with 19-month highs, and up 77% from a February low.

He also says the 3D print trade faces an array of challenges, ranging from the type and price of potential materials, to rethinking entire supply chains for portions of the industrial landscape.

The technology has broad, deep implications for design, productivity and labor, as well as distribution of global manufacturing capacity. Nigro sees the development as part of the Fourth Industrial Revolution, a view of economic and industrial history argued by Klaus Schwab, founder of the World Economic Forum.

Stephen Nigro is president of HP Inc.'s 3D printing operations.

Nigro offered IBD a status report on HP's role in the progress toward that manufacturing revolution, and on some of the near-term challenges faced by HP and by the industry.

IBD: In a blog post, you said the world needs a new industrial revolution. How so?

Nigro: The first industrial revolution was all about the invention of steam power, which really impacted the textile industry, going from cottages to factories. The second was about the invention of electricity and the division of labor. This created mass production assembly lines and changed again how the world manufactured. The third industrial revolution was relatively recent. It was about the invention of electronics and information technology. It allowed this whole concept of mass production of assembly lines to go global.

We think that we're on the cusp of this fourth industrial revolution, which is about digitization, ones and zeros basically driving everything in the world, including your factories. These factories will become incredibly efficient but they will also become incredibly flexible. It will allow the creation of new products and completely new product categories. And once again it will change the world. It's inevitable and certainly will have a lot of benefits associated with it.

IBD: In what way is HP's new 3D technology disruptive and part of this change?

Nigro: Let's take a step back. The 3D printing industry right now is tiny. In 2015 we estimate it was a $3.4 billion industry, and projected to grow at a 30% compound annual growth rate. You hear that it's going to become an $18 billion industry by 2021, which in one sense is big but, relative to global manufacturing being a $12 trillion industry, it's still tiny. And really today there a lot of limitations with current 3D printing solutions. They are too slow. They're really kind of expensive to use, quality can be a challenge, especially the consistency and level of quality.

Where 3D printing actually makes its penetration into manufacturing and production today is in very high-value, specialized applications and with extremely short product runs. 3D printing today is mainly for prototyping. But the promise is with production and manufacturing.

The abilities we bring with HP's multijet fusion and voxel-printing technology is speed and more production. We're going to be up to 10 times more productive relative to other solutions and we also have some compelling economics. 3D printing is going to be a key element of the fourth industrial revolution.

Our voxel printing technology is pretty unique because it creates functional, or mechanically strong parts at high speeds. There are other voxel-level 3D printing technologies out there but they are very limited in speed and production quality. But it's not the only 3D printing technology that's going to be out there in the world. Just like there are many molding technologies, many plastic technologies, this industry will be made up of many 3D printer technologies and products.

IBD: What's the key to seeing a big expansion in the use of 3D printers?

Nigro: There are six things that need to happen. No. 1 is the product, like the products we just introduced. We need 3D printers that get higher productivity, plus consistent quality. A second key for the industry to grow its materials. Today in the 3D printer market, the number of materials available is limited and needs to expand dramatically.

Also, if you take a material today that goes into a 3D printer it's very expensive relative to that same material for a traditional manufacturing process. So the material prices really need to come down.

Another key will be getting products designed for 3D printing. That creates new design boundaries. You can create completely new designs that were not possible before. Another key is supply changes. When you are now able to have factories that are incredibly flexible, on demand, with no inventory, you have to rethink whole supply chains. And as you get more automated, labor becomes a different factor. And the last item that will help the market truly grow will be standards and regulations. The industry will have to develop 3D standards for different applications and different industries that are regulated. We see those as six keys unlocking the market.

IBD: What printing materials are most widely used?

Nigro: The two major 3D print technologies are plastics and metals. Plastic is by far the largest portion of the market today, with metals second. All others are quite small.

IBD: What industries have been the most aggressive in applying 3D technology?

Nigro: Where you see 3D printing being used is where the application really takes advantage of its unique capabilities. Typically it's in the area of very high performance, where cost is less important. So where you see it today is in aerospace, where you're willing to pay for that performance. And the other is medical. More industries are getting involved. We announced a partnership with BMW, that's automotive. We announced a partnership with Johnson & Johnson (JNJ), that's medical. We announced a partnership with Nike (NKE), which is consumer products. We also announced a partnership with Jabil Circuit (JBL). Now Jabil is interesting because they're the third-largest contract manufacturer in the world.

IBD: You said the long-term success of 3D printing requires an open platform. How so?

Nigro: The world has to embrace 3D printing. In May of this year when we announced our product what we said is that the biggest innovation we are bringing today is not a product. It's bringing our open materials platform. The only way you're going to get this transformation is you need the whole world working with you, which is why we announced an open materials platform. We announced four partners at the time — Arkema (ARKAY), BASF (BASFY), Evonik and Lehmann & Voss. They are developing materials for use in multijet fusion printers. They determine what materials need to be developed. They determine the pricing of the materials. Now, today, they need to work closely with us because the system is very complex. Over time what we want to get to is we want to be able to give them a development kit and say go at it. Do your thing.

What we've created is this material app store where you, as a user, have the choice of buying HP-branded materials or any other material that's been certified for use. We started with four partners but we've had more than 100 other specialty materials companies contacting us and wanting to develop materials on our platform. We think that's the key to unlocking large production in manufacturing.

IBD: GE acquired two 3D printer manufacturers in Europe for $1.4 billion in September. How do you view their participation in the market?

Nigro: I think it's fantastic. They're validating the power of 3D technology. It's complementary to what we're doing. We are very much going after plastics- or polymer-based 3D printing. They are focused on metals. Now, we have aspirations for metal, too. I think GE will be complementary and accelerate the industry.

IBD: The two largest independent 3D printer makers, Stratasys and 3D Systems, saw their stock price collapse because the industry expectations were too high. Was it overhyped?

Nigro: I won't say anything about them, but I'll speak to the market as whole. Yes, definitely, the market was overhyped. It did set the industry back some, but the promise is there. The industry has experienced some disillusionment. But with HP getting in, GE getting in, having large corporations involved is great, not just from the resources they bring but also a little more sophistication in terms of how they think about it, and quite frankly, bigger aspirations.

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